# Tex. Dep't of State Health Servs. v. Sky Mktg. Corp. Supreme Court of Texas, No. 23-0887 **Tex. Dep't of State Health Servs. v. Sky Mktg. Corp., No. 23-0887 (Tex. May 1, 2026). Holding: The vendors have standing, but sovereign immunity bars their ultra vires and APA claims, because the Commissioner lawfully modified the Schedule I terms THC and "marihuana extract" under Section 481.034(g) and the amendments do not conflict with the 2019 Texas Farm Bill, which exempts only the THC naturally occurring in hemp and not manufactured delta-8 THC; the Court rendered judgment reversing the temporary injunction.** Practice areas: administrative law, governmental immunity ## Key issues - Sovereign immunity bars hemp vendors' ultra vires claims against the DSHS Commissioner over her 2021 changes to the controlled-substance schedules, because Texas law gives her significant discretion to set and modify them. - The vendors have standing and their claims are ripe, but immunity also bars their remaining claims against the Department, so the Court affirmed in part, reversed in part, and rendered judgment. ## Factual History Both federal and state law historically treated all parts of the cannabis plant as controlled; in 2018 Congress removed "hemp," defined as cannabis with a delta-9 THC concentration of not more than 0.3 percent on a dry-weight basis, from the federal schedules, and in 2019 the Texas Legislature passed the 2019 Texas Farm Bill, which adopted a near-identical definition and removed hemp and "the [THC] in hemp" from the Texas list of controlled substances (Opinion, PDF pp. 3-4). When the DEA modified the federal definitions of THC and marihuana extract in 2020, the DSHS Commissioner objected under Health and Safety Code Section 481.034(g) "to the extent that the definitions allow for the presence or addition of [THC] aside from the presence of delta-9-[THC]," and in January 2021 she declined to adopt the DEA's changes and amended the Texas schedules (Opinion, PDF pp. 4-6). In October 2021 the department announced on its website that Chapter 443 allows consumable hemp products that do not exceed 0.3% delta-9 THC and that all other forms of THC, including delta-8 in any concentration, are Schedule I controlled substances (Opinion, PDF p. 6). Hemp businesses then "scrambled to 'pull products from the shelves, abruptly halt sales, [and] destroy significant amounts of inventory'" (Opinion, PDF p. 7). ## Procedural History Licensed manufacturers, registered retailers, and others (the vendors) sued, asserting ultra vires claims against the Commissioner for modifying the 2021 schedules without following the procedures of Sections 481.034-.035 and in a manner contrary to the 2019 Texas Farm Bill, and claims against the department under the Administrative Procedure Act that the 2021 amendments and the website statement were invalid rules (Opinion, PDF pp. 6-7). The department and Commissioner filed a plea to the jurisdiction asserting sovereign immunity and challenging standing, the trial court denied it and granted a temporary injunction, and the Third Court of Appeals (Austin) affirmed, holding that the vendors had standing and that the ultra vires and APA claims survived (Opinion, PDF pp. 7-9). The vehicle in this Court is a petition for review filed by the department and the Commissioner, argued January 14, 2026, and decided May 1, 2026, with Justice Sullivan not participating (Opinion, PDF pp. 1, 9, 30). ## Issues Presented The department and Commissioner present whether Texas law authorizes the Commissioner to schedule controlled substances such as delta-8 THC and whether the vendors' challenge to that designation is barred by immunity or lack of standing (Petition for Review (Petitioner), PDF p. 10). The vendors present whether the trial court properly denied the plea because they have standing, pleaded valid ultra vires claims, and pleaded valid APA claims, and whether the temporary injunction was proper (Brief on the Merits (Respondent), PDF p. 12). ## Standard(s) of Review The Court first confirmed its own and the lower courts' subject-matter jurisdiction, applying the doctrines of standing and ripeness (Opinion, PDF pp. 9-10). Whether the Commissioner acted ultra vires turned on the construction of the Texas Controlled Substances Act and the 2019 Texas Farm Bill (Opinion, PDF pp. 17-27). ## Legal Arguments **Whether the vendors have standing.** **Department and Commissioner (Petitioners):** The trial court had no subject-matter jurisdiction because the vendors lack standing and the Commissioner's authority to publish the Texas schedules is not reviewable (Brief on the Merits (Petitioner), PDF p. 22). **Vendors (Respondents):** They demonstrated concrete injuries traceable to the department's and Commissioner's actions, which purported to make all hemp products illegal, and an injunction against these defendants would redress them (Brief on the Merits (Respondent), PDF p. 35). **Whether sovereign immunity bars the ultra vires and APA claims.** **Department and Commissioner (Petitioners):** The Commissioner has absolute discretion to object to a federal scheduling change, delta-8 THC has been Schedule I for fifty years, and the Legislature in the 2019 Farm Bill did not give companies carte blanche to market unregulated delta-8 THC; the Uniform Declaratory Judgments Act does not waive immunity for lawful objections to the DEA's rule (Brief on the Merits (Petitioner), PDF p. 8; Petition for Review (Petitioner), PDF p. 16). **Vendors (Respondents):** The Commissioner's 2021 modification and the department's announcement were ultra vires acts that purported to make all hemp products illegal in contravention of the 2019 Texas Farm Bill, the Commissioner did not follow the required procedures, and the website statement was an invalid rule under the APA (Response to Petition (Respondent), PDF pp. 7, 13). ## Stated Reasons the Court Should Take the Case The department argued that the court of appeals' understanding of the Commissioner's power inexplicably binds Texas officials to the dictates of federal officials and that sovereign immunity bars the suit (Petition for Review (Petitioner), PDF p. 16). The vendors answered that the Commissioner's action effectively outlawed Texas hemp production contrary to the Legislature's intent and the separation of powers (Response to Petition (Respondent), PDF p. 7). ## Oral Argument - **Pocketbook injury.** Asked why vendors losing money from the Commissioner's changes lack standing, her counsel said pocketbook-injury cases involve direct agency effects on consumers, like the PUC rate changes. (Oral Argument, 0:05:06) - **2019 Farm Bill.** The vendors' counsel said the changes deviate from the 2019 Farm Bill, which says hemp and THC in hemp are not controlled substances, limited only by delta-9. (Oral Argument, 0:23:40) - **Threat of enforcement.** Asked what enforcement threat was aimed at the vendors, their counsel said the website statement itself threatens enforcement, because it says all THC in hemp is controlled. (Oral Argument, 0:32:00) - **Delta-8.** Asked if trace THC in hemp is excluded by statute, the Commissioner's counsel said the only set threshold is 0.3% delta-9, so synthesized, intoxicating delta-8 makes no sense. (Oral Argument, 0:13:50; 0:14:46) - **Procedure.** The vendors' counsel said the changes lacked required procedure, including express findings and written notice within ten days to the directors of other agencies. (Oral Argument, 0:22:00; 0:22:52) - **Governor's order.** Asked whether they challenge the governor's executive order, the vendors' counsel said they have filed no legal claims about it. (Oral Argument, 0:28:10) - **Who enforces.** Asked whether it matters who initiates enforcement, the Commissioner's counsel said yes, citing *In re Abbott* (2020) on the governor's order and the Attorney General's civil authority. (Oral Argument, 0:02:06) - **Federal rescheduling.** Asked about moving marijuana from schedule one to schedule three federally, the Commissioner's counsel said the President directed it but it has not yet taken place. (Oral Argument, 0:09:01) ## Practice Area Tags administrative-law, governmental-immunity ## Procedural Posture/Vehicle Petition for review from the Third Court of Appeals (Austin) in an interlocutory appeal from the denial of a plea to the jurisdiction and the grant of a temporary injunction; argued January 14, 2026 (Opinion, PDF pp. 1, 9). ## Amicus Involvement - [Citizens for a Safe and Healthy Texas](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=ca79a26e-39ff-4063-bdd3-d262c249d93e&coa=cossup&DT=BRIEFS&MediaID=690d3d0b-709d-4a69-a795-eafb0061431d) supports the department: hemp-derived products containing delta-8 THC became widely available by exploiting a loophole in the 2018 Farm Bill. - [Ron Beal](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=fdc0469f-309b-4689-b84c-cc74cd03cebb&coa=cossup&DT=BRIEFS&MediaID=c1959ea7-e1b6-4e54-b628-5d64fddbe463) also filed an amicus brief, and several amicus letters. ## Holding The vendors have standing, but sovereign immunity bars their ultra vires and APA claims, because the Commissioner lawfully modified the Schedule I terms THC and "marihuana extract" under Section 481.034(g) and the amendments do not conflict with the 2019 Texas Farm Bill, which exempts only the THC naturally occurring in hemp and not manufactured delta-8 THC; the Court rendered judgment reversing the temporary injunction (Opinion, PDF pp. 2-3, 17, 21-29). ## Court's Reasoning **Standing and ripeness.** The vendors, such as Sky Marketing, a Texas business that openly sold delta-8 products and held a hemp license, alleged lost sales and reputational harm from complying with the amended schedules, an injury traceable to the department's action because the whole point of the amendments was to end the market in which they operated, and not voluntary because they could not be expected to risk severe, potentially fatal penalties to get judicial review (Opinion, PDF pp. 11-14). The injury is redressable because the department's civil-enforcement authority, including license revocation and administrative penalties, is sharp enough, and the claim was ripe (Opinion, PDF pp. 14-16). **The Commissioner's discretion.** The Controlled Substances Act directs the Commissioner to establish and modify the schedules and gives her an unusually high degree of discretion, and under Section 481.034(g) federal scheduling actions are incorporated automatically unless she objects, after which her decision is "final unless altered by statute" (Opinion, PDF pp. 17-20). That finality provision means the Legislature reserved review of an objection to itself, so the vendors' procedural ultra vires claim fails, and the amendments to the THC and "marihuana extract" definitions were authorized to respond to the federal change (Opinion, PDF pp. 20-23). **The 2019 Texas Farm Bill.** The vendors' argument that the Farm Bill decontrolled all non-delta-9 THC is plausible and rooted in text, but the Legislature defined "hemp" to cover only the naturally occurring constituents of THC in the plant, and it would be putting an elephant in a mousehole to read it to remove all THC, even THC created artificially, from the Commissioner's discretion without a clear statement (Opinion, PDF pp. 23-27). The one potential conflict, for naturally occurring trace delta-8 in hemp, is one the government disclaimed any intention to enforce, so an injunction on it would be an "empty vessel" (Opinion, PDF pp. 26-27). **APA claims.** The Controlled Substances Act, not the APA, governs publication of schedule modifications, and the website statement did not purport to amend the schedules and has no independent legal effect, so immunity bars the APA claims (Opinion, PDF pp. 27-29). The Court did not decide whether the injunction's statewide scope was improper but cautioned Texas courts to ensure that any injunction is no broader than necessary to protect the rights of the parties before them (Opinion, PDF p. 30). ## Disposition Court of appeals' judgment affirmed as to standing and otherwise reversed, and judgment rendered reversing the trial court's temporary injunction (Opinion, PDF pp. 3, 29-30). ## Vote Breakdown Justice Young delivered the opinion of the Court; Justice Sullivan did not participate (Opinion, PDF p. 1). --- Source: The SCOTX Report, https://scotxreport.com/cases/23-0887. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.